The company could still end up paying large sums in damages

In a decision that has implications for online locker services, a federal judge in New York gave on Monday a partial victory to MP3tunes, a company that runs an online music storage service.

District Judge William H. Pauley III on the United States District Court of the Southern District of New York ruled that MP3tunes may claim safe harbor protection under the Digital Millennium Copyright Act (DMCA) for works from music label EMI that were stored on its site, or were linked to Sideload.com, its second website that allows users to find and download free song files on the Internet.

EMI and fourteen record companies and music publishers, collectively referred to as EMI, brought the copyright infringement action against MP3tunes and its founder and CEO Michael Robertson. Some 3,189 sound recordings, 562 musical compositions and 328 images of album cover art were at issue in the lawsuit filed in 2007.

MP3tunes did not promote infringement, said Judge Pauley in a 29-page ruling. "Rather it removed infringing links to Sideload.com when given notice, and terminated the accounts of users who blatantly shared copyright files with others,"

"While a reasonable person might conclude after some investigation that the websites used by MP3tunes executives were not authorized to distribute EMI's copyrighted works, the DMCA does not place the burden of investigation on the Internet service provider," he added in reference to a charge by EMI that MP3tunes executives had downloaded music from infringing sites.

MP3tunes does not however qualify for safe harbor protection for its failure to remove from user lockers the songs "sideloaded" from links identified in takedown notices from EMI companies.

The Judge also ruled that MP3tunes can be held liable for "contributory infringement" as it was aware that infringing tracks were in users' lockers and continued to be accessible to users from its servers. He said that Robertson was liable for infringing tracks he personally downloaded and stored in his own account.

Robertson, who founded and later sold MP3.com after a copyright infringement action, set up MP3tunes in February 2005. The company offers a locker service that allows users to upload their music and play it on any Internet device. In a blog post, Robertson described the ruling as "definitely a victory for cloud music and MP3tunes' business model after a multi-year litigation battle".

Those in the industry that are building or contemplating personal music service like Amazon, Google, Grooveshark and Dropbox will surely have renewed confidence in offering similar unlicensed services, Robertson added.

EMI could not be immediately reached for comment.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com